Cloud data warehousing company Snowflake is the talk of the IPO town as of late with the company offering its shares to the public for the first time during Wednesday’s trading session. Even though Covid-19 put a lot of IPOs on hold, other startup-to-public companies through the rest of the year could help boost IPO-focused exchange-traded funds (ETFs).
Per a CNN business report, Snowflake “priced its initial public offering Tuesday night at $120 a share — well above the expected range of $100 to $110. That price range was revised upward from the original expectation of $75 to $85 a share earlier this month. It now trades on the NYSE under the ticker symbol ‘SNOW.’”
“But demand was so strong that shares finally wound up opening early Wednesday afternoon at $245 a share and quickly climbed above $300, for a 150% gain,” the report added. “Shares pulled back a bit as the day wore on but still finished the day with a nearly 112% gain.”
“I want to personally congratulate Snowflake on what appears to be a truly massive IPO," said cloud data company Yellowbrick CEO Neil Carson. "This IPO validates that the market for data warehouses is large and growing. Yellowbrick and Snowflake share a common vision that data warehouse modernization is important and a top priority for businesses grappling with formidable economic, social, and customer behavior changes. Our own Yellowbrick approach to data warehouse modernization is focused on the enterprise and hybrid cloud applications that solve the vast majority of enterprise data needs that are not cloud-only. Snowflake’s IPO is a definite win for our industry and for the businesses Snowflake serves as well as the enterprises we serve—all of which are desperate for new data and analytics approaches.”
ETF Positioning for Future IPO Strength
Investors can get broad exposure to IPOs via the Renaissance IPO ETF (IPO ). IPO seeks to replicate the price and yield performance of the Renaissance IPO Index, which is a portfolio of companies that have recently completed an initial public offering (“IPO”) and are listed on a U.S. exchange.
Another fund worth looking at is the First Trust US Equity Opportunities ETF (FPX ). FPX seeks investment results that correspond generally to the price and yield of an equity index called the IPOX®-100 U.S. Index, which seeks to measure the performance of the equity securities of the 100 largest and typically most liquid IPOs, including spin-offs and equity carve-outs of U.S. companies.
For investors seeking IPO opportunities around the globe, the Renaissance International IPO ETF (IPOS ) adds an international spin to the IPO market. IPOS tracks the rules-based Renaissance International IPO Index, which adds sizeable new companies on a fast-entry basis with the rest upon scheduled quarterly reviews. Current IPOS holdings include SoftBank Corp, Xiaomi, and China Tower Corp.